Mohan Singh Oberoi

Founder of Oberoi Chain of Hotels

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The Oberoi group has its headquarters in Delhi and is a global hotel company. It was founded in 1934 by Mohan Singh Oberoi (born in 1989) and now the Oberois own and operate 35 luxury hotels and two river cruise ships in five countries which are India, Sri Lanka, Australia, Eqypt and Hungary.

He was born to a contractor and grew up in a small city of Bhaun, Punjab (now a part of Pakistan) with as few as 8000 residents.

He pursued his schooling from Dayanand Anglo Vedic (DAV) in Rawalpindi and decided to practice law, but he left it in between and began focussing on his career. He had two sons Tilak Raj & Prithvi Raj and two daughters Swaraj & Rajrani from his wife Ishran Devi.

Early Life

The story of Mohan Singh Oberoi is very interesting about how the brand began and eventually became one of the India’s leading hotel chains.

Mohan Singh had a tough life in his childhood with limited resources. His father died when he was just six months old. Mohan Singh dropped out of school and began working in his relative’s factory in Lahore as a manager in 1918. But he had to leave his job and come back due to extensive riots in Amritsar. Later when the situation had calmed down he was very keen on going back but he shaved off his beard which was considered highly offensive in the Sikh culture. So, the entire family cut off ties with him and he killed all the options of joining back work. At the same time a virulent epidemic broke in his village and he was forced to escape with his wife and daughter.

He came to Shimla, the summer capital of British India, to try his fortune and acquired a job at INR 50 per month at Cecil Hotel as a manager. In 1927, Ernest Clarke who was then the manager of Cecil Hotel, offered Mohan Singh to give him a one year contract to manage their Delhi Club. In 1929, Mohan Singh followed Clarke to run a fifty room Carlton in Shimla which Clarke had leased from the bank for INR 9000 a year and renamed as Clarke’s Hotel. In 1930, Clarke made Mohan Singh his partner at Clarkes. Mohan Singh suggested to buy out the property which was made possible by a loan of INR 1,35,000 from the Delhi contractor Sardar Bahadur Narain Singh (founder of The Imperial in Delhi). The business picked up quickly but the debts began to rise too, as the lease of the Carlton had also come with the struggling Grand Hotel in Delhi. In 1933, Clarke was in a financial crisis and soon after that Clarke died. Mohan Singh now came up with a master plan and bought shares from Clarke’s widow for INR 20,000. In no time, Mohan Singh Oberoi was the sole proprietor of Clarke Hotels in Delhi and Shimla. Then he started the quest of The Oberoi Group.

Entrepreneurship

Mohan Singh paid back all the loans in the next few years and at the same time he was offered The Grand Calcutta (owned by Armenian real estate tycoon – Stephen Arathoon) which was in a state of decline. Mohan Singh negotiated with Mercantile Bank (liquidators of the estate Stephen Arathoon) very wisely, to reduce the lease of the Shimla hotel. They agreed but kept a condition that a European manager be appointed, his former employer at the Cecil, DW Grove. In addition to it, in 1938 Hotel Pvt Ltd. was formed with an investment of INR 1,00,000 with a contribution of INR 25,000 each from the former two along with Shiv Nath Singh(owner of the Palace Hotel, Karachi) and Dr. Hari Ram.

Rise

In 1943, Mohan Singh received a prestigious title of Rai Bahadur from the The Majesty. Mohan Singh was growing his empire and took over the Associated Hotels of Indian chain and rented Delhi’s Hotel Imperial. Then he purchased the Grand for INR 89 lakhs and then paid off Kapur, Dr. Ram and finally Shiv Nath. Oberoi began to leave its footprints everywhere possible.

  • In 1947, they opened The Oberoi Palm Beach Hotel. In 1948, his elder son and his friend Ripu Bhagat launched travel agency Mercury Travels, but eventually sold it to his sister Swaraj and her husband Gautam Khanna.
  • In 1949, Mohan Singh registered The East India Hotels Ltd(EIHL). Then he merged all the hotels that were under EIHL. There were just a few contributors, though the company was public, Mohan Singh himself, his son Tilak Raj, Motilal Khaitan, N Haksar, Ripu Bhagat, E Brett and Man Singh.
  • In 1951, the 65 room Everest Hotel, another Arathoon Hotel in Darjeeling was purchased which was ended by the termination of the partnership in 1952 of Hotel Pvt. Ltd.
  • In 1955, Mohan Singh leased the former Palace of the Maharaja Hari Singh for a fee of INR 5,000 per month for the next 20 years, which had been vacant for nearly a decade.
  • In 1956, Mohan Singh bought the Swiss Hotel opposite Maidens which was once the residence of Lord Curzon and now owned by Chunamals.

Fall

Business was touching the sky and spreading like fire, but to their shock, they saw an unfortunate demise of the elder son Tilak Raj in 1984. The entire family was shattered, and huge responsibility had to be restored. By then his younger son had started helping in their business and hence considering all the factors Mohan Singh passed on the responsibility in the hands of Biki, his younger son and asked him to take over the position of the CEO in 1984.

The Oberois came to a standstill when Sardar Bahadur, the property owner of The Imperial hotel in Delhi dragged the group to the court out of jealousy, to reclaim the property.  Sardar Bahadur was infuriated and did that because he realised that Mohan Singh was making more money than he needed to pay for the lease of the hotel by renting out every corridor to shops at the hotel.

oberoiHotels

Image Credit: www.oberoihotels.com

Comeback and Expansion

Mohan Singh undertook the situation very smartly and removed everything- cutlery, linen, chandeliers, carpets, furniture, and even the bathroom fittings and gave it back in the same condition he had received it and ended the deal.

  • Mohan Singh had sent his younger son to stay in the best of the hotels across the world and learn their techniques. In 1959, he returned and married Goodie (daughter of a Punjabi landowner of Lyalpur) and then formally joined the family business.
  • The year of 1966 saw quite a few achievements after the younger son entered the business. Mohan Singh tied up with ITT Sheraton to build a new 34 or 36 storey hotel on a high priced plot of land in Bombay, which was completed in 1973 and was built at a cost of INR 180 million.
  • In 1966, Oberoi had also started a hotel management school in India to promote the industry and fill the gaps. He made Sven Jorgensen, the well renowned Intercontinental F&B manager, in charge of the school. The idea of the school was working very well with thousands of applications every year for three hundred seats rolled out.
  • In 1969, they purchased The Kathmandu Soaltee Hotel in Nepal which was owned by the Prince of Himalaya, the uncle of King Mahendra. With this they took a big leap and entered the international market. Along with this, Oberoi’s also took over the management of Singapore’s Imperial Hotel.
  • In the next two years the chain stretched out their business to Mena House in Giza, Eqypt as well, but because an ample amount of money was needed to restore it, the Oberoi’s cleverly took a decision to guarantee a 6% ROI to the owners, instead of pitching in any capital.
  • Between 1973 and 1978, the Oberois expanded their business to Sri Lanka, Australia and Bali. In Sri Lanka they launched The Lanka Oberoi. They won the bid of The Windstor, Australia & The Bali Oberoi, Bali.
  • In 1984, after the demise of the elder son, Biki accelerated the Oberoi chain to greater heights by making capital out of every opportunity that came his way and made the ‘Oberoi’ brand a well renowned product classy and flamboyant successfully.
  • Just after everything was coming back to normal the family and entire India got another shock by the demise of Mr. Mohan Singh Oberoi at the age of 103, who was not only a legend but also the father of the Indian Hotel industry.
  • Since then, Biki the younger son of the family has taken over the position of Chairman of the group and continued his journey to success. Since Biki was from an affluent family, he got the opportunity to leverage the luxuries of the world. He used every bit of his knowledge and experience that he had gained from his schooling in UK and Switzerland, to become one of the leading hoteliers in the world.
  • To expand the business even further, he needed assistance so he extended his team by including his son, Vikram Oberoi and his nephew, Arjun Oberoi who is the son of Tilak Raj as joint Managing Directors.
  • He is a great leader under which the group reached a total revenue worth INR 1142.95 crores in 2011.
  • The Group grew to become the pompous owners of 29 luxury hotels and 2 river cruise ships in five countries under the names ‘Oberoi’ and five-star ‘Trident’ & Maiden brands. They are considered as one of the most decorated hotel chains of the lot. The Group has also expanded itself into flight catering, travel and tour services, airport restaurants, car rentals, corporate air charters and project management.
  • Under the three brand names the Group has hotels all over the country and abroad. In India the chain covers New Delhi, Mumbai, Bangalore, Kolkata, Agra, Jaipur, Bhubaneshwar, Udaipur, Shimla, Kerala, Gurgaon, Chennai, Cochin and Hyderabad. Other than these, in abroad the hotels are in Mauritius, Indonesia – Bali & Lombok, Eqypt – Sahl Hasheesh on the Red Sea & Nile Cruiser, U.A.E – Dubai and Saudi Arabia – Madina.

The founding family is the majority shareholder of EIH Ltd, the parent company of the Oberoi Group, with 35.24% stake. Other than that, cigarettes to Hotel conglomerates, ITC Limited has a 16.1% stake. To ward off pressures from the ITC ltd., on 30th August 2010, Mukesh Ambani’s Reliance Industries Ltd. bought a 14.12% stake in EIH by paying INR 1,021 crores valuing EIH ltd. at an enterprise value of INR 7,200 crores. The stake of reliance further raised from ITC and it stood at 18.5% overall for Reliance Industries.

The hotel has various competitors in this arena including Hilton hotels, Hyatt hotels, Marriott international and Taj hotel.

Achievements

Mohan Singh Oberoi was a recipient of various awards and achievements.

  • In 2001 he was awarded with “Padma bhushan”, third highest civilian award in the Republic of India.
  • In 1943, he was awarded with the title of Rai Bahadur by the British Government.
  • In 1955 he was elected President of the Federation of Hotel and Restaurant Associations of India.
  • In 1960 he was named as the President of Honour of the Federation for life.
  • In 1965, he opened India’s first modern five-star hotel, The Oberoi Intercontinental in Delhi.
  • Won elections to the Rajya Sabha for two terms, from April 1962 to March 1968 and from April 1972 to April 1978.
  • He was elected to the fourth Lok Sabha in April 1968, and was a member till December 1970.
  • He was named as one of the ‘Elite Winners of 1978’ by Newsweek.
  • He was awarded the PHDCCI millennium award in the year 2000.
  • He was recognized by Man of the World by the International Hotel Association, New York.